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Listen up, businesses! Time’s running out to claim your share of a $5.5B settlement

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Listen up, businesses! Time’s running out to claim your share of a .5B settlement

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Businesses still have time, but not a lot, to claim their part of a $5.5 billion class action settlement stemming from Visa and Mastercard’s alleged fee overcharges, attorneys said.

The deadline to file a claim is Feb. 4, extended from Aug. 30. Any nonprofit or business is eligible to file a claim if it accepted Visa and/or Mastercard credit or debit payments between Jan. 1, 2004, and Jan. 25, 2019. This includes businesses that have since closed or gone bankrupt.

The settlement was a result of a long-running antitrust case in which the two credit card network giants allegedly overcharged merchants by exacting excessive interchange fees, also called swipe fees. Merchants pay these fees, often a percentage of the sale amount, to bank card issuers and the networks each time a card is swiped.  

“The goal (of the extension) is to get this money into hands of merchants who were allegedly overcharged over this long period of time,” said Alexandra “Xan” Bernay, partner at Robbins Geller Rudman & Dowd LLP, a co-lead counsel with Berger Montague and Robins Kaplan lawfirms on the case. “We want to make sure people have the time to get their claim in.”

How can businesses file a claim?

Eligible claimants can file online at the official website. From there, enter and submit business details, transaction data, and proof of Visa/Mastercard payment processing during the eligible period. Businesses will have an opportunity to upload supporting documents. You don’t need to hire a lawyer.

If merchants changed their business name or structure over the 15-year period the settlement covers, there would be multiple entries grouped under the same taxpayer ID.

“The extension has been beneficial,” said Chad Anglin, owner of San Diego, California-based Pigment, which has been selling design savvy gifts, flora and furniture since 2007. “It’s given me time to go through my records.”

The settlement administrator that verifies claims and assesses them also helps, said Ryan Marth, partner at Robins Kaplan.

The administrator “has access to a lot of credit card and bank data. So, for many merchants, they can just go to the site, create an account with a taxpayer ID, and after a few days, their information will show up based on the administrator’s data,” he said. “If the administrator doesn’t have the records, (businesses also) have the opportunity to ask the administrator to provide additional resources to help search for sales data.”

Most merchants will find their data pre-populated in the database. In some cases, merchants are asked to provide the available data that they have, supporting a claim.

How much money will businesses get back?

Amounts will vary depending on the size of the business and how many valid claims are submitted, Bernay said.

But “most will find it’s worth their time to file,” she said.

When will businesses get paid?

There’s no date for when checks will get sent, the attorneys said.

“There’s a process that has to take place by the claims administrator to vet and audit claims to make sure they haven’t’ been wrongly submitted and everything’s above board and correct,” Bernay said. “We tell businesses to remain patient.”

Is this related to the Credit Card Competition Act?

This case is separate from the battle merchants are currently waging against Visa and Mastercard over credit card swipe fees.

Merchants claim Visa and Mastercard, which control more than 80% of the market for card purchases, comprise a duopoly that gets to set swipe fees. They’ve been asking Congress for years to pass the Credit Card Competition Act to lower fees. The Act would require merchants have a choice of at least one card network that’s not Visa or Mastercard to process their transactions.

Payments groups oppose the legislation, saying the fees support fraud-prevention technology and consumer rewards programs. Retailers also benefit from accepting credit cards because people tend to spend more, they said.

Back in 2005, when this case was filed Visa and Mastercard were bank associations, meaning groups of banks owned and governed each of them, Marth said. Those banks set the fees collectively, instead of competing, which is why this was an antitrust case.

Since then, Visa and Mastercard each spun out into their own public companies.

Medora Lee is a money, markets and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning. 

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